The Unreasonable Landlord

As a tenant advisor, one of the hardest parts of my job is explaining to a client why a landlord won't accept terms that are otherwise reasonable and reflective of the market for comparable space, especially in a lease extension. The answer is tough to communicate, conveying as it does an element of responsibility to the client. You see, it's a matter of leverage, which is a function of time. When a tenant looking to extend an existing lease starts the process too late and fails to activate market leverage, the landlord can hold the line on above-market terms.

What occupiers sometimes miss is that while there's a comparable market where similar spaces, leased in a similar timeframe, tend to land at similar value, every transaction is still its own negotiation. The landlord is under no obligation to price its space "at market". In fact, their incentive is to maximize the value they extract from each lease. There's no ceiling or floor on that. The market is simply what a willing tenant will pay. And the "comparable market" is really just an average of outcomes, some negotiated well by tenants who used time and leverage, and some negotiated poorly by tenants who didn't.

The real difference isn't a comparison between reasonable and unreasonable, but what you get when you run a strategic process versus what you get when you show up late with no leverage. If I'm doing my job well, my client never has to ask why the landlord won't be reasonable. But the setup isn't always clean. I'm not always brought in early enough to build leverage before it's needed.

The fix is simple: start early and hire someone whose job is to build that leverage before you need it. Do that, and you'll find your landlord to be much more reasonable.